Economy under strain as Labour's 'unparalleled' borrowing to send national debt past £3trillion

Fresh forecasts suggest the scale of the problem is about to cross a significant and symbolic threshold.

Britain's national debt is poised to surpass the £3trillion threshold for the first time this year, according to projections from the Office for Budget Responsibility.

The country's outstanding borrowings currently sit at £2.93trillion, a dramatic escalation from the £350billion recorded at the start of the millennium.

OBR forecasts indicate the debt pile will climb beyond £3.5trillion by the 2030-31 financial year, marking a tenfold expansion over three decades.

A combination of the 2008 banking crisis, the coronavirus pandemic and the energy price surge has pushed government borrowing towards 100 per cent of national income.

The Chancellor plans to borrow in excess of £430billion during the next five years to address shortfalls in public finances.

The Treasury has allocated £135billion for debt interest payments in the 2026-27 fiscal year, a sum that vastly exceeds the £90billion designated for defence and falls just short of the £145billion set aside for education.

Taxpayers face a bill exceeding £600billion in interest charges over the coming five years as servicing costs continue to escalate.

With total government expenditure projected to hit £1.4trillion, approximately one pound in every ten spent by ministers will go towards meeting interest obligations on existing borrowings.

The Chancellor has implemented tax increases totalling £75billion annually, representing the largest revenue-raising measures by any holder of that office in at least sixty years.

Welfare expenditure is forecast to rise from £333billion this year to more than £400billion by 2030-31.

Conservative business spokesman Andrew Griffith accused the government of "testing the limits with an unparalleled level of national debt," warning that young people struggling to find employment will inherit record borrowing levels.

A Reform UK spokesman drew attention to the scale of interest payments, stating: "Thanks to successive Tory and Labour governments, Britain spends almost as much on servicing debt as it does on education."

The OBR has noted that previously planned reductions in expenditure have been dropped, with the government having diluted welfare reforms and removed the two-child benefit cap.

Economic conditions have deteriorated since the summer, with growth stalling as households and businesses contend with mounting tax pressures.

Unemployment has risen from 4.1 per cent to 5.1 per cent since Labour took office.

The United Kingdom's debt challenges form part of a broader global pattern, with analysts identifying 2026 as a pivotal year for fiscal stress worldwide.

The IMF estimates that worldwide public debt is approaching $100 trillion and could exceed the size of the entire global economy by 2029, levels not witnessed since the aftermath of the Second World War.

Britain and France have been highlighted as particularly exposed because both nations depend heavily on overseas investors to purchase their government bonds.

UK gilt yields remain elevated at approximately 4.5 per cent, up from around four per cent when Labour entered government, despite successive interest rate reductions by the Bank of England.

The OECD has cautioned that 42 per cent of global public debt will mature by 2027, forcing governments to refinance at rates nearly double those of the low-interest era.